House Appropriations Committee hears update on Vermont’s $195 million Rural Health Transformation award

On March 10, 2026, the House Appropriations Committee heard an update from Jill Maza Olsen, Medicaid and health systems director at the Agency of Human Services, on Vermont’s Rural Health Transformation cooperative agreement, which Olsen said amounts to "195 million and change." Olsen told the committee the federal initiative is a national, five-year program intended to support rural health systems and that Vermont’s award is one of the largest on a per-resident basis.

Olsen said the agreement is a cooperative agreement with the Centers for Medicare & Medicaid Services (CMS), not a standard grant, and that it carries detailed federal oversight. "Every subgrant we write, every contract we write, every payment model we implement, anything we do will need to be approved by our program officer at CMS," Olsen said, describing a process that allows flexibility but requires CMS sign-off on subrecipients and payment approaches.

She gave the committee several calendar markers the state is using to sequence work: an internal target to obligate as much as possible by Aug. 1; the state’s first report to CMS due Aug. 31; CMS’s obligating deadline for year-one funds on Oct. 30; and a rough spending window that ends about Sept. 30 the following year. Olsen warned that any funds not obligated by Oct. 30 will be returned to a federal pool for redistribution in year two.

Olsen emphasized limits on permitted uses. The Notice of Funding Opportunity and cooperative-agreement rules mean Vermont is treating the dollars as largely one-time investments to launch new models, buy technology and foster collaborations, and each funded effort must include a sustainability plan so the state does not add permanent base spending. She said the award cannot be used to "supplant the state budget," and construction is limited to minor modifications rather than major renovation.

A notable constraint is a provider-payment cap: Olsen said provider payments cannot exceed 15% of the total award, which she estimated at about $29 million for year one. She cautioned the committee the department is still awaiting detailed CMS guidance on how "provider payments" and preventive or chronic-disease activities will be defined, and that definition will affect whether certain services count toward the cap.

Olsen told members the agency has 21 positions funded by the award, including a project manager and other staff to help implement projects. She said the department is currently focused on obligating planned projects and will move to a wider planning phase for year two once more is known about scoring and allowable uses.

On scoring, Olsen said states are being evaluated on initiative-level milestones rather than discrete activities, and that Vermont’s future year-two award could be affected by how it performs relative to other states. "I think it probably will" affect next-year funding, she said in response to a member’s question about underspending.

The presentation ended when the committee paused for a floor amendment; members were asked to return when their names were called and the meeting planned to resume the briefing afterward.

The committee did not take formal votes on this item during the session recorded.